Greenhaven Motors Ltd, Re [1999] EWCA Civ 3046 (31 July 1998)

Greenhaven Motors Ltd, Re [1999] EWCA Civ 3046 (31 July 1998)

The court must not sanction a compromise under section 167(1)(a) of the Insolvency Act 1986 unless it confers a real benefit on creditors or contributories; here, the proposed compromise conferred no such benefit and might even cause harm, so the appeal was allowed and the compromise was not sanctioned.

Citation
[1999] EWCA Civ 3046
Parties
Plaintiff/appellant: Ronald Willoughby Mayers; Defendant/respondent: BG Funding Limited; Defendant/respondent: Greenhaven Motors Limited (In liquidation, acting by its Liquidator, Robert Valentine); Defendant/respondent: Stephen Kaye; Defendant/respondent: Anthony Burstow; Defendant/respondent: George Goodman; Defendant/respondent: Robert Valentine
Jurisdiction
England and Wales
Judgment Date
31 July 1998
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division and Croydon County Court
Outcome
Appeal allowed in respect of the compromise sanction; appeal against costs order in Croydon proceedings dismissed.
Legal Topics
Liquidator's Powers, Court Sanction of Compromise, Costs Orders, Standing of Creditors and Contributories
Insolvency Company Law Civil Procedure Liquidator's Powers Court Sanction of Compromise Costs Orders Standing of Creditors and Contributories

Case Brief

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Parties

Ronald Willoughby Mayers

Plaintiff/appellant

BG Funding Limited

Defendant/respondent

Greenhaven Motors Limited (In liquidation, acting by its Liquidator, Robert Valentine)

Defendant/respondent

Stephen Kaye

Defendant/respondent

Anthony Burstow

Defendant/respondent

George Goodman

Defendant/respondent

Robert Valentine

Defendant/respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division and Croydon County Court

Legal Issues

  1. 1 What is the correct approach for the court when a liquidator seeks leave to compromise proceedings under section 167 of the Insolvency Act 1986?
  2. 2 Does the proposed compromise confer any benefit on creditors or contributories?
  3. 3 Should the court sanction a compromise that may not benefit creditors or contributories?

Ratio Decidendi

The court must not sanction a compromise under section 167(1)(a) of the Insolvency Act 1986 unless it confers a real benefit on creditors or contributories; here, the proposed compromise conferred no such benefit and might even cause harm, so the appeal was allowed and the compromise was not sanctioned.

Court Disposition

Appeal allowed in respect of the compromise sanction; appeal against costs order in Croydon proceedings dismissed.

Orders

  • Order of Mr Registrar Buckley set aside.
  • Costs of the appeal (including application for leave) to be paid by the respondents.